Banks and Banking Laww
Bank Liablity - Forged Checks
Although a bank is not supposed to pay a check on a forged signature, the law imposes a duty on the bank's customer to take appropriate care to make sure of a forgery does not occur. Unless the bank's customer has taken appropriate care, the bank will not be liable for paying on a forged check. In Jurcisin v. Fifth Third Bank, 139 Ohio Misc.2d 1, 2006-Ohio-5291, the Clermont County Common Pleas court held that an account holder, not the bank, was responsible for checks forged by her roommate and chashed by the bank. Ohio RC 1303.49 imposes a duty on a bank customer to exercise ordinary care. If a bank customer fails to exercise ordinary care that substantially contributes to an alteration of or to the making of a forged signature on an instrument, the bank customer is precluded from complaining that the bank cashed the instrument. Similarly, an employer who negligently supervises an employee who has access to the employer's checks is precluded from asserting the forgery against the paying bank. G.F.D. Ents, Inc. v. Nye, (1988), 37 Ohio St.3d 205, 525 N.E.2d 10.
In Groob v. Keybank , 108 Ohio St.3d 348, 2006-Ohio-1189, Messrs. Groob and Bowie sought financing to buy a company,
imparting apparently confidential information about the purchase (including the price) to the bank's loan officer. After the bank denied the loan to Messrs. Groob and Bowie,
the loan officer contacted another bank customer. The loan officer and the other bank customer bought the company for the same price. Mr. Groob sued the bank and the former loan officer.
The trial court dismissed the bank, but a jury awarded compensatory and punitive damages from the former loan officer. The court of appeals reversed the dismissal of the bank, but
the Ohio Supreme Court reinstated the dismissal. According to the Court, (1) banks do not owe fiduciary duties to their customers with whom they deal at arms-length and (2) the
bank is not responsible for wrongful acts of its now former loan officer. The misuse of confidential information was outside the scope of her employment, even though she received
the confidential information through her employment. Merely being aided by her employment status is not enough.
Ucker & Hemmer LLC represents small and large businesses in the Columbus, Worthington and
all over Ohio.
David W. T. Carroll and Timothy J. Ucker handle business representation.
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